Pulp Faction

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Despite last year’s long-anticipated green light from the Securities and Exchange Commission that allows companies to issue online E-proxy statements in lieu of traditional paper copies, many companies continue to keep the presses rolling.

In a recent survey of 482 companies conducted by the National Investor Relations Institute, just over half (56 percent) said they’ve used or plan to use E-proxies in 2008. Of those, only 22 percent plan a full switch away from paper to electronic distribution; nearly a third plan to offer both print and online materials, and the rest are undecided about which way to go. Of those that are holding off, two-thirds say they want to wait and see what lessons can be learned from early adopters.

The big appeal of E-proxies is savings, which was cited as a factor by 79 percent of those that plan to make the switch this year. Applied Micro Circuits Corp., a semiconductor maker based in Sunnyvale, Calif., was one of the first companies to use E-proxies last year. By issuing its proxy, 10-K, and annual report online, it saved $186,000 in printing and mailing costs (while spending $46,000 to comply with the E-proxy guidelines), according to Scott Dawson, vice president of treasury and investor relations. Of nearly 45,000 shareholders who were sent notices that they could request hard copies, only 187 (or 4 percent) took advantage.

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One concern about E-proxies is that they help activist shareholders more cheaply rally fellow shareholders to the causes du jour. But Beth Young, a senior research associate at The Corporate Library, maintains that such fears are overblown. “There are many costs associated with dissident campaigns,” she says. “E-proxies may have a marginal effect, but they won’t dramatically change shareholder behavior.”